(Updates with capital-raising steps in second paragraph.)
Jan. 9 (Bloomberg) -- Banco Santander SA, Spain’s biggest bank, said it met the 9 percent core capital ratio requirement set by the European Banking Authority as it sold stakes in South American lenders and issued new stock.
Santander, which had to raise 15.3 billion euros ($19.4 billion) by the end of June, found the funds by selling stakes, swapping preferred shares for stock and paying dividends in stock, the bank said in an e-mailed statement today. The bank also counted 6.83 billion euros of bonds sold to retail customers that automatically convert into shares as capital.
The EBA told Spanish lenders last month to raise more than 26 billion euros in fresh capital as regulators force European banks to bolster their defenses against the euro area’s sovereign debt crisis. Santander, the bank with the highest capital shortfall identified by the EBA, reiterated today that it would aim to achieve a core capital ratio of 10 percent by the end of June while maintaining shareholder remuneration at 60 cents per share.
Santander said it raised 4.89 billion euros by generating capital from earnings and selling stakes in banks mainly in Chile and Brazil.
In relation to the Brazilian stake sale, Santander said it reached an agreement last month to transfer 4.41 percent of its bank in the country to a “major international financial institution” that will deliver those shares to the holders of convertible bonds issued in October 2010 when they mature. Santander had agreed in October 2010 to sell $2.7 billion of bonds that must convert into stock in its Brazilian unit to Qatar Holding LLC.
The following gives details of the steps taken by Santander to raise capital to meet the EBA requirements. Figures are in billions of euros:
Valores Santander (mandatory convertible bonds): 6.829 Exchange of preferred shares for ordinary shares: 1.943 Scrip dividend program: 1.66 Capital generation from earnings, stake sales: 4.89
--Editors: Dylan Griffiths, Francis Harris.
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